Ted Simons:
Tonight on "Horizon," another all-nighter for Arizona lawmakers and still no budget deal. They were back at it this afternoon. We'll have the latest and we'll look at one proposed plan to sell the state capitol buildings to help close the budget deficit. Next on "Horizon." Hello and welcome to "Horizon." I'm Ted Simons. Joining me tonight, Mary Jo Pitzl of the "Arizona Republic," Daniel Scarpinato of the "Arizona Daily Star," and Howard Fischer of Capitol Media Services. Our guests deserve extra thanks for joining us after working all night at the capitol and again today covering budget talks. Let's talk. Mary Jo, things go south overnight. Big time. What happened?

Mary Jo Pitzl:
Ted, first I want to note I wore pink to match my eyes. These don't look anywhere near as bad as a lot of lawmakers and fellow journalists that were out there. What happened last night is sometime in the middle of the night the house got together enough votes to pass the budget package which includes controversially the sales tax referral. They could not move that thing out of the Senate. They tried and tried every which way they could. They were up to 15 votes. They believe they needed one more vote and despite what a dawn visit by Governor Brewer to Senator Pamela Gorman, nothing changed.

Howard Fischer:
The problem was that one of the votes was missing. Carolyn Allen, who is a Scottsdale Republican, is believed to support referring the sales tax to the ballot if for no other reason than, A, keeping the budget balanced and, B, it's part of supporting the governor. She twisted her knee essentially coming down the stairs of the capitol and she was at home and she was saying, look, I am not coming in at 3:00 in the morning unless you are sure this whole thing is going to happen anyway. That's part of the reason the governor who is getting very desperate now was twisting the arm of Pam Gorman. She wants this thing on the ballot. She wants it’s on the November 3rd ballot. We originally thought today was the deadline for doing that. It's next Thursday according to the Secretary of State's office. But she's very desperate to get this on November 3rd ballot and get it behind us.

Ted Simons:
Talk about the image chin nations overnight and what the Senate was short.

Daniel Scarpinato:
Part of it was that the support for this is razor thin. So you need every vote. If someone is sick or hurt, that screws things up. And so they are relying on every vote they can get. And even with some of the treats that have been added into this for conservatives, the tax cuts, the spending cap, you still have people like senator Gorman and others who have anxiety over voting for this referral. So at some point, do they have to go outside of Republican territory and get Democrats? And they haven't been willing to do that and it may not even be possible that the point.

Mary Jo Pitzl:
What's interesting up until Tuesday of this week they were talking to Democrat, at least legislators of both parties were working on a budget agreement. That fell apart on Tuesday when they were able to strike an agreement with the governor, leaving the Democrats once again at the altar. And nothing's happened. So we asked president bob Burns today, when would it come to the point that you to go to the Democrats? And he doesn't know and the house Democrats held what's become almost a weekly press conference to say, bring us in, bring us in, we need five party talks.

Howard Fischer:
The interesting thing and Dan is right, some of the Republicans like Gorman, like senator Ron Gould are saying we are afraid of any potential tax hike, even if we think voters will reject it. This bill is a Republican dream. Even assuming that voters were to approve this one cent, one cent and half cent sales tax increase that's a maximum of $2.5 billion over three years. This bill includes an immediate repeal of the property tax, which mainly affects business. That's $250 million a year and beginning in 2011, a 30% cut in corporate income tax rates and a 6.6 cut in individual tax rates and those are permanent. They will take place no matter what voters do. This seems to be a great dream and yet some of the Republicans don't get it.

Daniel Scarpinato:
In addition to that, one of the issues is referring to the ballots, to allow lawmakers to dip into all these protected funding things that they wanted to get into for a while now. I talked to Andy Tobin, who is the whip in the house. He said, I'm not sure that there's 31 votes, which is what they need, for a moderate budget, that there aren't enough people who can come to the middle and do that. When Napolitano was able to get out a couple bipartisan budgets, you had a totally different dynamic because you had moderate Republicans. You don't have a lot of moderates on either side anymore. And both sides have stuck together so closely.

Howard Fischer:
That gets to the point about; can you bring in the Democrats? Let's assume for argument's sake you can bring a 12, all 12 Senate Democrats and all 27 house Republicans. What they want is, we'll support the sales tax increase if you promise that any money raised goes to increase education funding, not to replace it, and you get rid of all those tax cuts. At that point I think you have knocked virtually Republican off of the bill. So you still don't have the formula which is what --

Ted Simons:
How hard a bargain can Democrats use now, considering what Howie just said, but also knowing they felt spurned? They thought they had a deal working here and they thought they had some sort of kumbaya thing going and there was a side deal.

Daniel Scarpinato:
Part of it is them being in the minority, the only way to do anything and have any influence is to always stick together completely. And so there isn't really a possibility of breaking off a few Democrats. You are going to either need to try to get all of them or none of them. And that makes it really difficult, because you need to go, you need to at least go to some extent to do that. And you almost wonder looking back if the challenge that the Republicans laid out to the governor, which was, you find the votes, you find the moderates and you bring us those votes, if that was really the only way for her to get what she wanted.

Ted Simons:
How did the governor respond to that kind of challenge? How involved was she?

Mary Jo Pitzl:
Well, it's sort of hard to tell. She certainly didn't talk to Democratic leadership, as best we can tell. She, I am told, I think it was yesterday, she did make a call to Representative Chris Deschene looking for some support. Earlier this month, she had called a couple of Democrats, rank and file members, trying to pick them off. But all her attention this time was focused on getting the Republican votes.

Howard Fischer:
It's going to be interesting to watch over the next few days, because there's an air of desperation. When she walks over to the Senate and spends 90 minutes behind closed doors with Pamela Gorman, and essentially begs and pleads and says, Pamela, we need this, the state's in a horrible situation and walks away with nothing and she recognized that deadline is approaching to try -- particularly for the November 3rd ballot, I'm interested what does she give up? That sort, does that desperation. It's sort of like you being in a bar right before closing and you have that desperation look. That's what the governor has.

Daniel Scarpinato:
And willing to do that and have that meeting with a lawmaker who has been particularly critical, particularly personal in some of her criticisms of the governor, I think that showed, as you point out, the desperation here.

Ted Simons:
Things seem to work in the house. Not so much with the governor, not at all in the Senate. Are we looking at speaker Adams having the most control of what he can control right now among those three?

Mary Jo Pitzl:
Well, yes. But it's a relative question. I mean, there were 32 Republican votes. That's one more than they needed to pass out that budget last night. And, yes, Adams has shown an ability to pull together enough of his caucus, most of almost all of his caucus to hang together on this. A lot of them admit lead holding their noses, just choking on their yes votes. Even though, as Howie says, some might see the Republican dream, they do not like the sales tax referral.

Howard Fischer:
What's going to be fascinating, their speeches, meant for us to put out to their constituents, Ray Barnes said, yes, I agreed to put this on the ballot but I also agreed to go out in my community to lead the charge to convince people to vote no. You are right. This is not exactly an enthusiastic endorsement.

Daniel Scarpinato:
The question is, how many times do you keep trying this? This is now, as you point out, a much, much more conservative budget than the ones before. And now they can't get the votes, and they could get votes on one that was less conservative. I don't know how many times you keep trying the same approach of getting all Republicans on a tax referral. It doesn't seem to be working.

Mary Jo Pitzl:
With this deadline, if you really want to make that November 3rd ballot, the Secretary of State's office told me it's August 5th so at this point a day matters. Who's going to be in the Senate on Tuesday? We know at least Senate majority leader Chuck Gray is going to be on a boat somewhere. He's on a cruise that goes from Sunday to Sunday. Probably set this up a long time ago. It really, really sharpens the intensity, how can you get this done?

Ted Simons:
With that in mind is this latest agreement, the latest things we've looked over, is this latest agreement still alive? Do they have to start back at square one? Do they just send over the same thing that was vetoed -- what's going on?

Mary Jo Pitzl:
I mean, I think it's still alive. The governor's office says, look, we are one vote shy. We need one vote. We need 1/3 reed calendar in the Senate and we got it.

Howard Fischer:
You can pick up one vote in funny ways. Let's talk about our friend Jack Harper. He was one of the people along with Gorman and Gould saying I will never vote for this. All of a sudden Jack said, well, I got this little idea I would like. I would like to cut employment in state government by 5%. And I would like to take some money away from the auto theft authority and I would like to monkey with two Tucson's river improvement project and said they said, we can make that happen. What do you need? What do you need bring on a Pamela Gorman A. Ron Gould? I don't think Gould is tolling do that. Pamela is a very political animal. I think there's something that can be offered to her where she can go back to her constituents and say, look what I got you and you can still vote no on the sales tax hike.

Ted Simons:
You think something can be offered?

Daniel Scarpinato:
Possibly. I think the best way to put it is that last night this had a near-death experience and considering most people at the capitol believe in reincarnation of bills, anyway, I mean, it could come back. But there may have to be some tweaking to sweeten the pot even more for folks.

Mary Jo Pitzl:
Even if you count out Gorman and Gould, I don't know what you do about Chuck Gray going gone for this week but don't cut out Caroline Allen. He told me he had problems with the budget package but he wasn't going to vote against the referral. He had problems with other portions of the budget which he's voiced when another iteration of this came up in early July or late June.

Daniel Scarpinato:
The key is getting to the 15 really. And then you get to 16 because there's very few people who want to be the person who kills it. And so if you can say, hey, look, you know, if you vote no you are going to kill it, there's people, maybe like Tibshraeny who are willing to support it as long as they know that they're not going --

Howard Fischer:
I look at this from the other side. I think there are people who want to make sure there are 16. You don't want to have to go on record I supported putting a tax ballot on the ballot and it didn't get there and you got it working against you in both ways. I think there are some magic things that happen with numbers.

Ted Simons:
There was much discussion of selling state assets as a way of gaining revenue including up and including the capitol buildings. Howie, you I know you wrote about this. Is this a real possibility?

Howard Fischer:
It's idle chatter but I'm telling you since we've all been kicked out of the Senate press room and I know there will be a feature in the next couple weeks on "Horizon" about this, I was going to say for $18.2 million and it's an ugly building filled with asbestos, if we can all pool our master cards and American Expresses here I think we ought to about it thing. Look, the fact is, they need to borrow money. You cannot borrow money just on the open market because the state has debt limit of $350,000. It goes back to territorial days. So you can do one of two things. You revenue bond where you got a source coming in like gas taxes, or you do what they call a sale lease back. You say I am going to sell this building. But you are going to give me exclusive rights to lease it. I get to walk away from the lease any time which means I am not in debt but at some point I own the building. This house and Senate were added in there for just effect. There are other buildings like the prisons that make sense.

Ted Simons:
That's a fancy way of saying "Borrowing" and it suggests it will cost more money in the long run.

Howard Fischer:
Of course.

Ted Simons:
Is this still on the table?

Mary Jo Pitzl:
Oh, yeah.

Ted Simons:
State prisons and any sorts of things still out there?

Mary Jo Pitzl:
I think you can see perhaps other things coming on to the table as the longer this drags on. One note, you can't sell the original capitol because Governor Symington's former budget chief told me that and I said how do you knee? He said "Because I tried."

Daniel Scarpinato:
It does show the desperation that you would be willing to sell the house and the Senate buildings. I mean, I understand the reason behind it but I think it shows how far they are willing to go here and how far they need to go because revenues are down so much.

Howard Fischer:
How far they are willing to go rather than raise tax. That's the point. You talk to John Cavanaugh and you say, John, if you sell $700 million worth of buildings your interest payment is going to be $50 to $60 million a year and his point is, that's better than having a tax hike. That's how desperate they are.

Ted Simons:
All right. You guys are down there all night, burn, the midnight oil and then some. I understand things got a little testy as the hours went on. Surprise, surprise. Describe the scene. How -- how much animosity was there?

Mary Jo Pitzl:
I wasn't there all night but I saw Senator John Nelson this afternoon and said, "So, what was it like last night? I heard there were some fights." He said "Which fight do you want me to describe?" There were some several loud quarrels as I understand it.

Howard Fischer:
One of them involved our Jay Tibshraeny trying to get his 16th vote for the piece of the package and Sylvia Allen who had agreed to support package literally shrieked at him in the back of the Senate and say, "I thought you said you were going to support the governor." "I'm supporting the governor!" When you are up for 24, 36 hours, tempers start getting frayed.

Daniel Scarpinato:
No. He's speaking to the frustration particularly the Democrats have that they feel -- well, he feels like voters have gotten what they deserved. They put more Republicans in the legislature. And we are getting a Republican approach to this. And so if that's his invoice was, if that's what the voters want, they want Republicans, then, that's what they are delivering.

Ted Simons:
Another quote, Representative Ray Barnes, “being down here is pure hell." How much is personality playing into what's going on right now?

Howard Fischer:
It's the whole place is personality. Understand that these, anybody who runs for office and puts their ego out there, first, "Give me money so I can run," and "Vote for me." It's all personality. You have to have an ego. You have to believe that you are making a difference and a lot of the world revolves around you. When it doesn't go your way, you get frustrated. For lawmakers to say why is this taking so long? Why am I down sneer ray Barnes is saying, look, I don't need to be here at 3:00 in the morning. There is frustration there, there is personality and you are going to have the conflicts.

Mary Jo Pitzl:
What's funny all these people say its hell, but then they run again. They want to be there. And I am sure hope springs eternal that you can change the process but there has been a more gridlocked, dead locked, dead in the water session than anybody down there has ever seen.

Ted Simons:
The Rasmussen poll, not good for the governor, not good for the legislature. Legislature, 17%, age 17% said good or excellent. Governor, 25% good or excellent. We can talk about the same polls as far as Joe Arpaio. 57% positive. We won't go in that direction. Let's go with representative's Chabin's perspective. It all goes away and the campaigns start again and there you go.

Mary Jo Pitzl:
I mean, if campaigns start, certain campaigns will be happy to remind voters of what's been going on. And pointing out, you know, all these quotes about this being hell and this being dysfunctional. There will be a certain amount of attention. This will be kept alive by campaigns and depending how much the budget affects people's lives and another force is the teachers union. They have been down there almost every step of the way, and they are mobilized and they are mad and if they can sustain that through the next year, that might keep it in front of, right in front of the voters' minds.

Howard Fischer:
I think you got the key point. As bush said, first Bush said if the economy, stupid, if people are feeling that their pocketbook is being affected because of something that went on or that their children are not getting their education like one of the provisions in the bill says, you know that free full day kindergarten you are getting? The school district can charge for that. That will keep in fronts of them and they will blame the legislature.

Ted Simons:
You think this could have a lasting effect?

Daniel Scarpinato:
Well, I think that for whatever reason, people don't really pay attention to the legislature, legislative races unless something is wrong. And so that's why you have seen renewed attention on this. I still think that the only way the Democrats could really capitalize on this is if they have a statewide referendum almost on the legislature, and that has to be how they frame their campaign, not so and so versus so and so because people don't really pay attention.

Howard Fischer:
Given the gerrymandering in the districts it doesn't matter. There's some districts if Genghis Kahn was running, the Republicans would vote for him.

Ted Simons:
Close for Genghis Kahn?

Daniel Scarpinato:
Close to winning the House and Senate.

Ted Simons:
We will stop it right there. Great working again. Thanks for being here after a very long night. "Horizon" will be preempted Monday through Wednesday next week for special programming. We will be back Thursday for a special edition of "Horizon." The presidents of Arizona's three universities will join us to share ideas on making higher education more affordable. Again, that's next Thursday on "Horizon." And then Friday, another edition of the journalists' roundtable. That is it for now. I'm Ted Simons. Thank you so much for joining us. You have a great evening.